Navigating Inclusive Just Transitions in Indonesia

This policy brief by the International Institute for Sustainable Development (IISD) examines the socio-economic challenges of phasing out coal in Indonesia. It argues that while coal mine closures will lead to projected losses in output, income, and employment—particularly in East Kalimantan—these can be mitigated through strategic investment in high-potential green sectors, improved intergovernmental coordination, and the inclusion of informal workers, women, and youth in transition planning.

• Coal is a primary economic driver in several Indonesian provinces, with some regencies deriving up to 80% of their gross domestic product from mining. The sector contributed approximately 3.6% of the national GDP in 2022, with production concentrated in East Kalimantan (62%), South Kalimantan (17%), and South Sumatera (11%).
• Quantitative modeling indicates that coal mine closures will cause economic losses across output, sectoral income, and employment, with the most severe impacts projected for East Kalimantan Province. These losses can be mitigated by allocating fiscal stimulus to high-potential sectors outside of coal mining and targeting top output-multiplier sectors.
• Informal workers, particularly those in logistics and food services, make up more than half of the surveyed respondents and are disproportionately vulnerable to mine closures. There is a critical need to integrate the informal economy into policy interventions, specifically by expanding social protection and reskilling programs.
• Women and youth face significant barriers in coal-dependent communities, including lower earnings for women compared to men and a lack of formal job opportunities for young people. Indonesia currently lacks the institutional mechanisms required to ensure gender-inclusive insights inform energy policies at national and subnational levels.
• A significant gap exists in vertical coordination between national ministries and local governments. Local governments are responsible for workforce development and social protection but are often excluded from national energy planning, which impairs the implementation of comprehensive transition strategies.
• The brief recommends a mixed-method approach to transition planning, combining quantitative economic models with qualitative, community-based research. This is because quantitative models alone fail to capture nuanced social factors and gender and social inclusion (GEDSI) impacts.

APA

Vazi, B., Sepia, I., Gass, P., Sundari, R. M., Firmansyah, A. D. A., Oktavilia, S., Azyzia, S. H., & Prayogi, R. (2025). Navigating Inclusive Just Transitions in Indonesia. International Institute for Sustainable Development. https://www.iisd.org/system/files/2025-11/just-transition-coal-indonesia-summary.pdf

Chicago

Vazi, Bathandwa, Istu Sepia, Phillip Gass, Refina Muthia Sundari, Anisa Dwi Ariyani Firmansyah, Shanty Oktavilia, Siti Hilmiati Azyzia, and Ryan Prayogi. Navigating Inclusive Just Transitions in Indonesia. International Institute for Sustainable Development, 2025. https://www.iisd.org/system/files/2025-11/just-transition-coal-indonesia-summary.pdf.

Wikipedia

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BibTeX

@techreport{vazi2025navigating, author = {Vazi, Bathandwa and Sepia, Istu and Gass, Phillip and Sundari, Refina Muthia and Firmansyah, Anisa Dwi Ariyani and Oktavilia, Shanty and Azyzia, Siti Hilmiati and Prayogi, Ryan}, title = {{Navigating Inclusive Just Transitions in Indonesia}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = nov, url = {https://www.iisd.org/system/files/2025-11/just-transition-coal-indonesia-summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }